Does Firm Size Influence the Collection of Sensitive Data?: A Study of Child-Orientated Apps

Abstract

How does firm size affect the privacy protections offered to customers? On the one hand, it could be that larger firms use their size to amass more data. On the other hand, smaller firms may be less careful in their data protection practices, because they have a different perception of risk. Using data from the Google Play Store over a three-year period, we explore this empirical question in the U.S. children's app market. Our findings indicate that larger app developers consistently implement stronger privacy protections, requesting less sensitive data compared to smaller developers. These results hold across empirical approaches, including instrumental variables and the propensity-score matching approach. Additionally, our analysis shows that mergers between developers and sudden increases in size of the user-bases of the product are associated with reduced data collection. We show that newly created and updated apps produced by large developers collect less data compared to existing apps. Our findings indicate a trend toward standardized privacy practices across different national regulatory regimes. This research highlights the potential for growth-driven improvements in data privacy practices among app developers, regardless of their regulatory context.